Pace trumps competition to acquire Aurora Networks

Broadband access CPE provider Pace plc says it has agreed to acquire Aurora Networks, Inc., which specializes in optical transport and access products for the cable MSO market. Pace apparently reach the agreement in competition with others interested in buying Aurora.

Oct 23rd, 2013

Broadband access CPE provider Pace plc says it has agreed to acquire Aurora Networks, Inc., which specializes in optical transport and access products for the cable MSO market. Pace apparently reach the agreement in competition with others interested in buying Aurora.

The agreement calls for Pace to acquire privately held Aurora for an initial payment of $310 million in cash plus an additional $13 million payable on closing in connection with tax benefits to be recovered over the three years after the close. Pace hopes the deal will close by the end of this year.

There is little if any overlap between the companies’ product lines. Pace’s two principal product areas are set-top boxes and residential gateways. Aurora offers an array of optical access and optical transport products – it purchased the Trident7 PON line of Enablence Technologies, in addition to such homegrown products as optical nodes, digital return technology, and RF over glass (RFoG) products. Assuming the deal closes, Aurora would function as a strategic business unit. The Aurora brand would remain intact, the current management team would remain in place, and the unit would have its own P&L.

“Since the announcement of the Pace Strategic Plan on 17 November 2011, we have consistently delivered on it, achieving almost all of the milestones and targets laid out at that time and there remains significant opportunity for development of the core business,” said Allan Leighton, chairman of Pace, in a press release announcing the deal. “The acquisition of Aurora represents an important evolution in this process and enhances our strategy to grow a broader platform across hardware, software, and services. Acquiring Aurora will allow Pace to expand beyond our core business and build deeper and more embedded relationships with our customers, which the company believes will strengthen Pace’s position as a market-leading solutions provider for the pay-TV and broadband industries.”

Aurora has shown 30 consecutive profitable quarters, Pace says. For the year ended March 31, 2013, Aurora generated revenues of $217 million and EBITDA of $30 million. For these reasons, Pace says that, should the deal close successfully, the acquisition will prove “significantly” accretive to earnings in 2014.

For Aurora, the deal provides scale, particularly as the company’s product roadmap brings it closer to the customer. Sources familiar with the deal indicate that once it became known that Aurora was in play, several bidders came forward. Pace’s significantly larger size and expertise in producing products on a large scale no doubt were attractive, as was the fact that the Aurora name and management team would remain in place with some degree of autonomy.

For more information on cable broadband access products and suppliers, visit the Lightwave Buyer’s Guide.

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